Research On The Insider's Control Of SOE: Essentiality, Obtainment And Governing

The reform to the state-owned enterprises has been one of the most important tasks in the transition. Since Soki advance "the insider`s control"in 1994,this problem has been paid more and more attentions by many economists. Soki thought that the insider`s control is unavoidable in transition. So is in our country. In recent years, the losing of state-owned assets and the informal MBO make the manager in the state-owned enterprise acquire a lot of private benefits in the process of the property right reform. With the deepened economical reform, the collusion has been the outstanding phenomena between the officeholder, the directorate, the audit personal and the managers in the state-owned enterprises. So it make us to think: why the collusion exits,what they gain, how to provent the collusion, and what can we do to prevent the collusion. This paper just wants to do some research on these questions. Based on the principal-agent theory, property rights theory and collusion theory, the paper analysized the Essentiality, Obtainment and Governing of our SOE`s the insider`s control. According the property right theory, the different arrangement of property right leads to the different effect. If the property rights are pulicness, unlike private goods, they are nonrival and nonexclusive. Everyone cannot be excluded from consuming, as a consequence, everyone want to get more goods. It induced too much consumption. So, efficiency is low, we called it "tragedy of commons". As long as the property right is public, the nonexclusive character of the consumption and use will inevitably leads to the excess consumption and the low effect. Exactly, property rights of SOE are public, but only a few persons and organizations are allowed to use and dispose the state-owned assets. Because the residual profit right and the residual control right are separated in the public-owned right and the serious lack of the owner has existed, the residual claim rights become "public goods". So everyone wants to consume more. It will include the managers, the related government department and the officers, auditors to make collusion to share the rights together. When managers snatch state-owned assets, the insider`s control what we just say will bring out. So, I think, the Essentiality of the insider`s control is that managers share or snatch the residual claim rights of the SOE. How the managers get their goals? As I think, the main means is that they collude with the supervisors. The fifth chapter of the paper analysised the probability of collusion between the managers in state-owned enterprises and supervisors. Via the review to the real economical systemic,we think the different profit main bodies who could dispose state-owned assets are the managers, the local governments all levels, the officers, the directorate, the audit and evaluated organizations. The profits in each group are different and incompatible in theory. on the other hand,the profits are uniform. For assets they face are public goods, they have common goal that share the profit to maxize their private utilities. So they have motivation to make collusion. On the other side, If our supervising mechanisms are perfect,the collusion are only likelihood but a fact. their collusion cannot get. But the exiting mechanisms pay less attention to the effective supervision to the managers in the state-owned enterprise. Also, we have no effective capitalmarkets and managers markets, no perfect coporate governance and payment mechanism. These facts made the emerging of the collusion are possible. As a result; they collude to share the state-owed assets. This is proved by the real cases such as YILI group case. At the same time, lots of false information and false finance reports emerged, which is one kind of collusion between audit organizations and listed companies. In 2004, the ministry of finance inspects about 18 accountant offices in China, 8 of them are found all kinds of problems. The last chapter in this paper, based on the frontal analysis and aimed at the real instance in china, we bring out some advises to solve the insider`s control. The deepen reform in the state-owned assets management mechanism, the shortness of the pricinpal-agent chain, the solvability to the lack of the right-owned are the foundations. The promotion the corporate governance is the other face to the insider control. The independent director institutes, the share inspiration to the managers are included. The organic investor will be the most important outsider force in future. Also, I talked about the establishment of the capital markets and managers markets.